List of 2009 Property Tax Increases

From this week’s House Republican Newsletter:

As it has been documented before in this publication, Governor Culver has been disingenuous in his public statements about promising not to increase taxes on hard working Iowa families. On several occasions this year the Governor has made declarations such as: “…I believe this is no time to raise taxes on hardworking Iowans” and “we’re not going to tax our way out of this, like California or New York.” However, his legislative proposals indicate otherwise.

House Republicans have and will always oppose tax increases on struggling Iowans, especially during times of significant economic turbulence. As result of this commitment, House Republicans are keeping tabs on all the proposals that seek to increase taxes and intend to fight them as they’re tucked into legislation considered on the House floor. This article focuses solely on proposals that seek to increase property taxes. Other schemes to increase taxes will be reported on in following issues.

Recommendations and Legislative Proposals Increasing Property Taxes on Iowans:

Governor’s Recommendations

  • Homestead Tax Credit
    The Governor proposes to underfund the homestead property tax credit by $49.9 million. Under Chapter 25B.7, if the state does not fully fund the property tax credits, a political subdivision shall only provide the taxpayer with the funded portion of the credit. Therefore, unless the political subdivision decides otherwise, the reduction in the tax increase will be passed onto the tax payer, increasing taxes on homeowners.

    Property Tax Increase – $49.9 million (average $64 per household)

  • Allowable Growth
    The Governor is recommending maintaining the 4% allowable growth rate. However, his plan proposes to cap the standing unlimited appropriation at roughly $2.531 billion. This is accomplished by funding regular school aid at a 2% allowable growth level and applying an additional reduction of $33.4 million (approximately equivalent to the FY09 1.5% ATB reduction). School districts will maintain the spending authority.

    Property Tax Increase – $85.9 million

  • Mental Health Services
    The Governor proposes to change how county mental health services are funded, by cutting the funding to the counties by $6.1 million and reducing the total amount of money they get for allowable growth. One solution to this is to lift the cap on the mental health levy, resulting in a property tax increase.

    Property Tax Increase – Unknown (has the ability to be substantial)

Legislative Proposals

  • HSB 3 Dropout/Dropout Prevention
    Current law permits the local school board to approve a dropout prevention levy. The state’s School Budget Review Committee rubber stamps the local board’s decision to pursue this “modified allowable growth.” School districts can count up to 5% of their enrollment when deciding how much to levy. HSB 3 increases the enrollment cap to 7%.

    Property Tax Increase – $23million – $55million

  • HF 40 Compulsory Education to Age 17
    HF 40 increases the compulsory school age from the age 16 to 17 as of July 1, 2010. The initial fiscal estimate is that this will add 560 new students to the school aid formula.

    Property Tax Increase – $500,000

  • HSB 40 Expanded Use of Physical Plant and Equipment Levy
    The Department of Education study bill seeks to allow the PPEL to be used to pay utilities and to pay the costs of transporting students.

    Property Tax Increase – Unknown

  • HSB 41 Foreign Exchange Students Added to Enrollment Count
    The Department of Education study bill seeks to add foreign exchange students to the K-12 public school enrollment count.

    Property Tax Increase – $300,000 (beginning FY11)

  • Open Scope Collective Bargaining
    Representative Rick Olson has stated House Democrats will pursue a version of HF 2645, the open scope collective bargaining bill from the 2008 legislative session. According to the Public Interest Institute, “Local governments would simply be unable to say no to such contracts, and they would be legally compelled to do one of two things: Raise property taxes to fund contracts they did agree to or declare bankruptcy.

    Property Tax Increase – Unknown (potentially tens of millions of dollars)

  • HF 397 Fire Protection Levy
    Mandates a minimum 40 and ½ cent township fire protection levy and creates more taxing authority by raising the maximum levy rate to 80 cents.

    Property Tax Increase – $15.7 million